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Hong Kong IPOs enjoying hottest quarter since 2015

City on track to surpass 2018 in terms of fundraising for first-time share sales, with companies raising US$36.6b so far

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Alibaba's mega US$12.9b share sale in Hong Kong last month gave a huge boost to the financial hub, which earlier this year had fallen far behind rival New York exchanges in issuance volume.

Hong Kong

HONG KONG initial public offerings are enjoying their hottest quarter among retail investors in four years.

The median retail subscription ratio for IPOs since the start of October is 13 times, the highest since the second quarter of 2015, data compiled by Bloomberg show. Back then, retail investors put in orders of 180 times the amount on offer, when the market hit a peak. Now, the Hang Seng Index is almost flat for the year.

The popularity of listings comes as Hong Kong enjoys an end-of-year spike in equity issuance despite prolonged anti-government protests and market volatility from the US-China trade war.

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Hong Kong is on track to surpass 2018 in terms of fundraising for first-time share sales, with companies raising US$36.6 billion so far, just US$200 million short of last year's total - which itself was the highest since 2010. Alibaba Group Holding Ltd's mega US$12.9 billion share sale in the city last month gave a huge boost to the financial hub, which earlier this year had fallen far behind rival New York exchanges in issuance volume.

For now, Hong Kong's position as a financial centre is "unassailable," said John Woods, chief investment officer for Asia-Pacific at Credit Suisse Group AG, at an event in the city on Monday. Alibaba's Hong Kong share sale - the world's largest dual listing ever - is proof, he said. "That's a pretty powerful statement and speaks to liquidity. There's nowhere else in Asia that has the level of liquidity that China needs."

The IPO exuberance is also reflected in the additional amount companies have been raising through their greenshoe, or over-allotment options. Alibaba fully exercised its option to sell up to 15 per cent more shares, it said on Tuesday.

Companies have raised US$3.49 billion through over-allotment options this year, the most since 2010, data compiled by Bloomberg show. The figure for 2018 was just US$2.23 billion, despite total issuance being higher. In percentage terms, companies since January have exercised on average 11 per cent of the total 15 per cent over-allotment available, weighted by deal size. BLOOMBERG